(FORTUNE Magazine) – Malaysian Prime Minister Mahathir Mohamad, who was on vacation during the speculative attack on Southeast Asia's currencies in mid-July, returned to Kuala
Lumpur in a combative mood. Mahathir remains certain he has identified what caused the currency assault, which wiped 15% off the value of the Malaysian ringgit in the past two months:
namely, George Soros, American billionaire hedge-fund manager. Mahathir, who vociferously objects to the merest hint of Western meddling in Asian affairs, believes Soros' aim is to
punish Malaysia for its support of Myanmar, or, specifically, its ruling junta, the State Law and Order Council (SLORC). Soros' Open Society Institute opposes the antidemocratic
activities of SLORC but has repeatedly denied that this has influenced Soros' investment decisions. "There is absolutely no connection between the Open Society Institute's Burma
Project and the currency trading conducted by Soros Fund Management," Soros declared in an official statement. Even so, Soros was irked that in late July, Mahathir and the other
leaders of the Association of Southeast Asian Nations formally ushered Myanmar into ASEAN. Here follow excerpts from an exclusive interview FORTUNE's Neel Chowdhury had with Mahathir
in Kuala Lumpur:

FORTUNE: On what basis have you accused Mr. Soros of speculating on the Malaysian ringgit and other regional currencies?

MAHATHIR: We have definite information that he is involved. Of course, he is not the only one. Others followed suit. But he started it. In fact, he more or less confessed later on
that he was involved. He had this idea that by applying pressure on Thailand and Malaysia he could prevent Myanmar from joining ASEAN. We also know that on his staff he has a person
from Myanmar who might be influencing him. We have every evidence that he is involved.

FORTUNE: Why do you oppose the activities of Mr. Soros' Open Society regarding Myanmar?

MAHATHIR: We believe Myanmar should be given time to make the necessary adjustments. We never believe in applying pressure on people. Trying to starve a whole nation in order to force
its government to behave, that is not our idea. If you want to act against the government, you act against the government.... You have to show them that the way others do things can
bring benefits to the country without in any way undermining their authority. Even if they lose authority they're not going to be thrown into jail. We have seen in some countries that
when military authorities give up power in favor of democracy, and they happen to lose the election, they are thrown into jail. I mean that democracy is not any better than the
dictatorship, because once you are elected to become the government you throw people into jail and then you say that you are a democracy. To me it doesn't make sense.

FORTUNE: But hasn't Myanmar's military government put its political opponents under house arrest?

MAHATHIR: Yes, they put people under house arrest for this. In some countries people are executed, they are massacred as in Bosnia. What has the international community done? Nothing.
You know they sat there and saw people being slaughtered in front of their eyes, and they did nothing. So why should we accuse these people? She [Burmese political dissident Aung San
Suu Kyi] is living comfortably in her own house. There are restrictions, of course. But it's not as if she's being strung up....

FORTUNE: There has been an anti-Semitic strain in the reporting on Mr. Soros in the Malaysian newspapers. What do you plan to do about that?

MAHATHIR: No, we are not anti-Semitic, because, as you know, the Arabs are also a Semitic people. We have always treated American Jews without any consideration at all that they are
Jews. But when a person of Jewish origin does this kind of thing, the effect is the same as when a Muslim carries out something that is akin to terrorism. Immediately people link it
to Islam, to Muslims, although generally Muslims do not behave like terrorists....People should stop accusing Muslims of being terrorists. People should not link Jews to these kinds
of activities. Most Jews I think are quite innocent. They are not involved in this at all. But the impression created is of course that being Jewish they have lots of money. They know
how to manipulate money as much as some people assume we Muslims naturally are terrorists, including myself....

FORTUNE: Are you worried that this quarrel you've had with Mr. Soros will deter foreign investors from coming to Malaysia?

MAHATHIR: We have no choice. He has wiped out billions of dollars from our economy, and if we're going to sit by and say nothing in the hope that it will not deter investors, then
we're going to pay a very high price for those investments.

FORTUNE: If Mr. Soros were right here in front of you, what would you say to him?